Efficiency of Microfinance Institutions: Analysis of Southern African Development Community (SADC) Member Countries
Domain:
socioeconomicRecord type:
paper
Creator:
ElsRaq
Publisher:
Host:
Microfinance is seen as an important tool for financial inclusion and the fight against poverty because it has both a
social and financial focus. The main objective of this paper is to evaluate the financial and social efficiency of 18
microfinance institutions (MFIs) in the year 2016 from 8 member countries of the Southern African Development
Community (SADC). The methodology chosen is the data envelopment analysis (DEA) with variable returns to scale
(VRS) using an input-oriented production approach. The results indicate higher scores of financial efficiency than
social efficiency. This may suggest that microfinance institutions adopt a more institutionalism approach over the
welfarist approach. We also find evidence that providing financial services to women or the entire disadvantaged
population is profitable. However, non-bank financial institutions (NBFIs) and non-governmental organizations
(NGOs) are more efficient in this regard than credit unions or banks.
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